Is there a correlation between President Trump and the stock market?
Aside from being labelled the Tweeter in Chief and now the third sitting US President to be impeached, can the market now refer to the U.S. President as the Trader in Chief?
Online trading platform, ETX Capital, has traced figures from Presidential elections and mid-terms since 2008 to see what, if any, Donald Trump has had on the stock market and trading. Looking back Trumps’ previous election and mid-term caused a spike in trading activity by over 10%. In 2016 saw a 60% lift in trading volume than the election of Barack Obama in 2012 as well as a 13% rise in the Dow Jones Industrial Average.
The study has found that the volume of trading in Trump’s first election, and first mid-term were not only higher than previous elections, but then the year in which they occurred.
Some of the ETX’s findings:
- Trump – In 2016, election month saw an increase of over 10% in trading volume, a rise which was also mirrored in the midterms in 2018.
- Obama – Obama’s first election occurred during an already-tumultuous period in the financial world, with November having a 15% higher rate of trades than the rest of the year.
- Obama’s two midterms and 2nd elections saw a decrease in trading volume, an average of -6.5% compared to the rest of the year.
An what about moves in gold?
Gold is a great historical indicator of global financial stability in the midst of rare global events. So far, the 21st century has seen some remarkable global events, making a huge impact on the world both politically and economically. But how much sway do these events have on the markets?
ETX found that Trump’s 2016 October election saw the value of gold dramatically drop 11.9%. In comparison, The Dot.com bubble bursting remains as one of the most dramatic events in modern history, and saw the price of gold drop by over 8%. Also, in the same year, the UK’s referendum over EU membership saw the price of gold shoot up by almost 8%.
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